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Feb 01 2017 Free Trade and the Trans Pacific Partnership |
The Trans Pacific Partnership Free Trade Agreement (TPP) is a trade agreement signed by Australia, Brunei Darussalam, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, Japan, and the United States, by former President Barack Obama. President Donald Trump has withdrawn from the TPP (it was waiting for approval by Congress). In an effort to understand the effects of this agreement I wanted to look at the pros and cons of the TPP and free trade.
The
TPP would boost exports and economic growth by creating more jobs and
prosperity for the 12 countries involved. It removes 18,000 tariffs placed on US
exports to other countries. The US has removed 80 of these tariffs on foreign
imports so the TPP would even the playing field. The agreement adds 223 billion
a year to incomes of workers in all countries. All countries agreed to cut down
on wildlife trafficking, especially elephants, rhinoceroses, and marine
species. It prevents environmental abuses such as unsustainable logging and
fishing. Opponents
in the United States see the pact as mostly a giveaway to business, encouraging
further export of manufacturing jobs to low-wage nations. According to the
Economic Policy Institute, if the TPP is agreed to, the US will lose more than
130,000 jobs to Vietnam and Japan alone. The agreement would make it easier for
corporate America to outsource call centers, computer programming, engineering,
accounting, and medical diagnostic jobs. The TPP would limit competition and
encourage higher prices for pharmaceuticals and other high-value products by
spreading American standards for patent protections to other countries. A
provision allowing multinational corporations to challenge regulations and
court rulings before special tribunals is drawing opposition. They argue that
the TPP would expand powers for corporations to attack our environmental and
health safeguards, make it easier for big corporations to ship our jobs
overseas, pushing down our wages and increasing income inequality, flood our
country with unsafe imported food, sneak in threats to internet freedom, jack
up the cost of medicines by giving big pharmaceutical corporations new monopoly
rights to keep lower cost generic drugs off the market, ban Buy American
policies needed to create green jobs, and roll back Wall Street reforms. The
concept of free trade agreements is to reduce barriers to promote trade of
goods without taxes or other trade barriers, trade in services without taxes or
other trade barriers, unregulated access to markets, unregulated access to
market information, and inability of firms to distort markets through
government imposed monopoly. Most economists would agree that open world trade
increases economic growth and raises living standards. World
output grows because of better use of economic scale, as a factory in one
country can serve a market the size of two or more countries rather than one.
It can benefit countries economy by expanding the variety of goods available to
businesses and consumers by increasing competition and thereby reducing the
extent of monopolistic pricing. Opponents
to free trade argue that most of the gains go to workers making $88,000.00 a year.
Free trade agreements contribute to income inequality in high wage countries by
promoting cheaper goods from low-wage countries. Workers in some countries and
industries are likely to lose jobs as production shifts. In
general, I feel free trade agreements are good for all countries involved.
However, I do not think the TPP would be beneficial to the United States in
that some of its provisions restrict US safeguards and standards and the
ability to litigate in US courts. I feel we do need an agreement with the
Pacific countries and if some of the more detrimental portions of the TPP were
modified, it would benefit all involved.
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